Bond expected to join McCaskill in backing financial rescue bill

Wednesday, October 1, 2008 | 1:52 p.m. CDT; updated 8:47 p.m. CDT, Tuesday, October 7, 2008

WASHINGTON— Sen. Claire McCaskill said Wednesday she will "hold her nose" and vote in favor of a retinkered bill to rescue the nation's financial industry.

The Missouri Democrat doesn't like the idea that taxpayers are funding the $700 billion measure, but she told reporters key changes to the bill will add more oversight and accountability.

Missouri Republican Sen. Kit Bond, who has urged the government to act quickly to end the financial crisis, also is expected to vote for the plan. He planned to make an announcement later in the day.

The Senate is expected to vote on the measure Wednesday night, and the House could vote on it by the end of the week. House leaders say prospects are improving for passage of the bailout package after lawmakers narrowly rejected it Monday.

McCaskill said the gears of the nation's economy are frozen because no lending is going on, making it hard for small businesses, college students and others to get loans.

"It will have a domino effect on our economy if the credit market remains frozen," McCaskill said.

She stressed the bill is not a blank check being written to make failed financial institutions whole. While the government plans to buy bad mortgages and other shaky assets for pennies on the dollar, McCaskill said there's a good chance those assets can be resold later at a profit once the credit crisis ends.

The Senate version of the bill includes tax breaks and a provision to exempt more than 20 million middle-class Americans from the alternative minimum tax. It also would increase the government's cap on insured bank deposits from $100,000 to $250,000.

Even smaller banks in Missouri are being affected by a "stunning" lack of liquidity, McCaskill said.

McCaskill said she spoke recently to owners of a mom-and-pop store who can't get a loan to expand their business. She also described talking to a Missouri businessman who had expected to receive a loan at 3.2 percent interest but is now seeing the same loan jump to 10 percent.


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